by Mark J. Schmidt

Do you remember the late 1980's? That was a time when financing of animal facility projects was much more difficult than it has been for the last few years. Frequently projects were postponed or abandoned because the appraised value of a proposed project was less than the cost of construction. Conservative lending institutions were not willing to make what they considered a risky loan.

Even with today's more liberal lending policies, it is still necessary for financial institution to get a satisfactory appraisal of a project before a loan is given. Unfortunately most banks employ appraisers who make very conservative appraisals and who are not familiar with the value of animal hospitals.

We recently were told that one of our projects may not be funded because the construction would cost more than a physicians office!

Of course an animal hospital costs more than a human clinic. Animal patients make a lot of noise, and they urinate and defecate not only in public portions of the building, but even in their private sleeping quarters.

Materials to handle cleaning, mechanical systems for adequate ventilation, and special construction to control sound all add to the general cost of construction.

Banker's don't always understand the nature of the project they are funding or assign an appraiser who can judge the value of the project realistically.

The local bank is not the only option. There are several national financing companies that specialize in veterinary clients.

A financing package can include owner equity, a bank loan and a federal Small Business Administration loan.

The better your business plan, the better chance you have of getting a high quality project funded adequately. A good business plan will define the conditions for your business that will generate the desired profit, and will be accepted by a lending institution. If your business plan is accurate and your proposed building project is realistic, you should have options for financing your project and not be at the mercy of a board of directors who do not have your best interest as their highest priority.

Knap Schmidt Architects can help prepare your business plan so you can get a head start on successful funding.